George Bailey kept the door open for out-of-sorts Labuschagne to retain his spot for the Test tour of South Africa despite last month's tough series against Bangladesh.
Labuschagne averaged 12 runs from three knocks against Bangladesh and has not made a Test century since the 2023 Ashes - 43 innings ago.
"We're still very much working through what that Test squad looks like, but I can say (we) separate out those formats," Bailey said.
"(Labuschagne's omission) was a one-day cricket conversation."
Labuschagne toured Pakistan and Bangladesh with the under-strength ODI squad earlier this year.
But Bailey said there was no room for him in the squad for six matches, three apiece, against Zimbabwe and South Africa during September.
The tour will be crucial preparation for Australia's 50-over World Cup defence in southern Africa next year.
"(This tour) is a pretty important tool for us," Bailey said.
"The opportunity that's well deserved and awarded to some of those other players to continue building out their roles and their performances in those games will be really important.Â
"Marn, again, he's played some really important one-day cricket for us. At his best, that looks a certain way, but the way that squad and team is structuring up, there just wasn't space for him."
Superstars Pat Cummins and Mitchell Starc will take part in the South African leg of the ODI tour, while Mitch Marsh, Travis Head and Josh Hazlewood return to the one-day squad after sitting our this year's tour of Pakistan and Bangladesh.
Young guns Ollie Peake and allrounder Joel Davies have been given a golden chance to shine on the limited-overs tour.
"It's another fantastic opportunity and a further chance for them to continue their exposure and growth in the Australian team," Bailey said.
Selectors have also named four-day and one-day squads for an Australia A tour of India in September-October, notably picking former Test batter Peter Handscomb for the red-ball section of the trip.
Australia is already navigating a transition period with its aging batting order and Handscomb will turn 36 shortly after next year's Test tour of India.
But the veteran right-hander is known for his proficiency against spin and played the most recent of his 20 Tests during Australia's last tour to the country in 2023.
"He's been a very consistent performer over a number of years, age irrelevant to that," Bailey said.
"We know that he has toured there in the past and he's got a game that's well suited there."
Brendan Doggett, Sam Konstas, Nathan McSweeney, Todd Murphy, Josh Philippe and Jhye Richardson will also play the four-day games, which are serving as somewhat of a selection trial for the India Test tour.
Australia has not won a Test series in India since 2004, and next year's visit looms as the last chance for several current players to do so before retirement.
Australia's ODI squad: Mitch Marsh, Pat Cummins (capt, SA only), Xavier Bartlett, Alex Carey, Cooper Connolly, Joel Davies, Nathan Ellis, Cameron Green, Josh Hazlewood, Travis Head, Josh Inglis, Spencer Johnson, Oliver Peake, Matthew Renshaw, Billy Stanlake, Mitchell Starc (SA only), Adam Zampa.
Australia A four-day squad: Brendan Doggett, Jack Edwards, Peter Handscomb, Sam Harper, Liam Hatcher, Campbell Kellaway, Sam Konstas, Nathan McSweeney, Todd Murphy, Fergus O'Neill, Josh Philippe, Jhye Richardson, Corey Rocchiccioli, Jason Sangha, Liam Scott.
Australia A one-day squad: Mahli Beardman, Nikhil Chaudhary, Ben Dwarshuis, Jack Edwards, Aaron Hardie, Spencer Johnson, Sam Konstas, Nathan McSweeney, Todd Murphy, Mitch Owen, Josh Philippe, Tanveer Sangha, Liam Scott, Lachlan Shaw.
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